Home Equity Program Shifts Focus To Stabilize Northwest Side | WBEZ
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Program Created By Racial Panic Shifts To Help Pay For Home Repairs

A controversial tax program created more than 30 years ago to prevent white flight on Chicago’s Northwest Side is shifting its mission to reflect needs in surrounding neighborhoods.

The Northwest Home Equity Assurance Program (NHEAP) is flush with $9.5 million that’s sat idle for years. The money collected was used as a kind of insurance program – homeowners could file a cash claim if the value of their homes dropped upon selling. It started after Harold Washington became the city’s first black mayor in 1983 and racial panic spread in the white bungalow belt. Some families feared their housing values would drop.

After nearly a decade of organizing, residents in several communities have galvanized to get new NHEAP board members and a new executive director, Ivy Ellis.

“I want Northwest Home Equity Assurance Program’s name to be synonymous with neighborhood stabilization,” Ellis said. “I would like us to remove stereotypes that this was white flight, and we’re still pushing toward that model. Our model is to keep everyone in their homes and keep these neighborhoods as stable as possible.”

By the spring, NHEAP will begin offering no-interest or low-interest loans for home improvements.

Here’s how the program has worked: All homeowners in the designated district — including parts of the Dunning, Jefferson Park, Belmont Cragin and Montclare community areas — pay a small tax of about $8 a year. That money goes into a fund, and homeowners voluntarily enroll in the equity program for a one-time fee between $150 and $225.

When homeowners in the program decide to sell, if the appraisal is less than the original purchase price, they can receive a cash claim for the difference as long as the depressed home value isn’t because of a recession. But the claims have been rare. The last payout was in October for $40,000.

Changing the program’s purpose to provide home loans now in diverse areas comes at a time when many of the communities want to prevent displacement and foreclosures. The expected range of loans will be between $5,000 and $30,000.

“When I tell people about the program, they kind of look at me like I’m crazy. They’re waiting for the catch,” said Kerry Murphy, an NHEAP board member and Dunning resident. “The benefit of this program for the community is going to be massive. I know so many people during the last financial crisis that walked away from their homes because they didn’t have the money for the repairs.”

And not only has the program’s purpose changed, so has its service area. In the 1980s, the four communities included in that area were each more than 90 percent white. Now, two of those four communities are majority Latino, and the other two are each about one-fourth Latino.

Five years ago, WBEZ did an investigation into these type of tax equity programs and why they still exist. All three are the result of a state law passed in 1988 backed by Illinois House Speaker Michael Madigan. And for years, another housing group, the nonprofit Northwest Side Housing Center, led efforts to change how the NHEAP fund works. A state law took effect that allowed home loans to be distributed, but for years, residents didn’t get answers from former NHEAP board members and its former executive director.

James Rudyk of the Northwest Side Housing Center said the tax program previously had been “a waste of public resources.” He said the hiring of Ivy Ellis is a step in the right direction. “She’s done more outreach in six months [than what’s] been done in 30 years. It’s a big, big victory for the community.”

Ald. Gilbert Villegas, whose 36th Ward includes part of the Northwest Side home equity district, worked with the office of Mayor Rahm Emanuel to get new board members appointed. He had been concerned about the fund's stagnant $9.5 million.

“A year from now, what I’d like to see is a couple of success stories from the executive director and some of the people from my ward and Northwest Side and taking advantage of this program. And demonstrating to taxpayers that this program is working,” Villegas said.

Natalie Moore is a reporter on WBEZ’s Race, Class and Communities desk. Follow her @natalieymoore.

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